The U.S. Securities and Exchange Commission (SEC) has issued internal guidance allowing certain stablecoins to be classified as cash equivalents, a move that signals a shift in regulatory approach toward digital assets. The guidance, reported by Bloomberg Law, affects stablecoins that are fully backed by low-risk, liquid assets such as U.S. Treasury bills and maintain a fixed 1:1 peg to the U.S. dollar. These tokens must also offer redemption rights to holders, providing clarity to financial institutions on their treatment in accounting and balance sheet management.
The new SEC guidance explicitly excludes algorithmic and yield-bearing stablecoins, which are considered riskier due to their volatility and less predictable mechanisms. This decision aims to protect investors and financial institutions by setting high eligibility standards for stablecoins that can be treated as cash equivalents. The guidance aligns with the provisions of the GENIUS Act, passed into law in July 2025, which establishes a legal framework for regulated stablecoins and mandates transparency through open audits and proper reserve requirements.
Under SEC Chair Paul Atkins, the agency has begun to adjust its earlier policies, which were seen as restrictive for traditional finance’s engagement with digital assets. While this guidance is interim and not a permanent regulation, it offers a structured accounting model for digital currencies until a comprehensive regulatory framework is developed. The move is part of a broader shift in the SEC’s approach to digital assets and reflects growing recognition of their role in the financial system.
Financial institutions stand to benefit from this change, as the classification of stablecoins as cash equivalents simplifies balance sheet management and reduces compliance risks. The added clarity could encourage traditional underwriters and corporations to engage more actively with digital assets, bridging the gap between traditional finance and the cryptocurrency sector. Although the guidance is temporary, it represents a positive step in the integration of blockchain-based assets into mainstream financial systems.
Market participants are now anticipating further regulatory developments from the SEC in the coming months. For now, treating certain stablecoins as cash equivalents helps resolve past ambiguities, supporting greater transparency and institutional adoption. The move underscores the regulatory body’s evolving stance toward digital assets and suggests a more accommodating environment for innovation in the financial space.
